Law:

Section:

- Sections 17(3) & 54 - Madras Agricultural Income-tax Act, 1955 CASES REFERRED TO CIT v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 [1958] SCR 101, CIT v. Sundara Mudaliar [1950] 18 ITR 259, CIT v. Zamindar of Singampatti [1922] 1 ITC 181, Manavedan Tirumalpad v. CIT [1930] 4 ITC 421, Pratap Singh Balbir Singh v. CIT [1952] 22 ITR 1, Province of Bihar v. Pratap Udai Nath Sahi Deo [1941] 9 ITR 313, Raja Mustafa Ali Khan v. CIT [1948] 16 ITR 330 (PC), Yuvarajah of Pithapuram v. CIT [1946] 14 ITR 92. JUDGMENT 1. This revision arises out of proceedings under the Agricultural Income-tax Act. The petitioner is Ouchterlony Valley Estates Ltd., a limited company engaged in growing tea and coffee and also in the manufacture of tea. It owns 1,400 acres of tea and 3,000 acres of coffee in Gudalur taluk in the Nilgiris District. This large area is divided into several sections, each being called an estate. The company is an assessee under the Madras Agricultural Income-tax Act (5 of 1955). For the assessment year 1960-61, the company filed a return showing a net income of Rs. 2,09,096. A month later, that is, on October 17, 1960, it filed a revised return showing a net loss of Rs. 93,018, stating that there were certain arithmetical inaccuracies in the earlier return. The Agricultural Income-tax Officer considered the return, checked the accounts, disallowed certain claims, added up the income from certain trees and made an assessment under section 17(3) of the Act. He determined the net agricultural income at Rs. 3,51,285.40 and levied a tax of Rs. 1,58,078.43. 2. The company preferred an appeal under section 31(1) of the Act to the Assistant Commissioner of Agricultural Income-tax, Ootacamund, contending that the Agricultural Income-tax Officer should not have included the sale proceeds of 2,146 trees amounting to Rs. 1,59,334, since they were forest trees of spontaneous growth and the income therefrom cannot be called "agricultural income" within the scope of the Act. The Assistant Commissioner negatived this contention and gave a finding that the trees sold by the company were not of spontaneous growth, that the sale proceeds would constitute agricultural income…

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